United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 403_95_1011

Appeal No. EAT/403/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 10 November 1995

HIS HONOUR JUDGE P CLARK

MR D A C LAMBERT

MR T C THOMAS CBE

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ABBEY MOTORS (HEMEL HEMPSTEAD) LTD          APPELLANTS

ANGELO CARTA          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR J SWEENEY

(of Counsel)

Legal Dept

Retail Motor Industry Federation

201 Great Portland Street

London

W1N 6AB

For the Respondent MR P STAFF

of Dacorum

Citizens Advice Bureau

19 Hillfield Road

Hemel Hempstead

Hertfordshire

HP2 4AA


 


JUDGE P CLARK: The Respondent was employed by the Appellant as a garage technician from 27 April 1987 until his dismissal effective on 29 January 1993. He presented a complaint of unfair dismissal which was heard and determined by the London (North) Industrial Tribunal on 6 July 1994.

The Tribunal decided that his dismissal was unfair and adjourned the question of remedies to a further hearing. The same Tribunal reconvened on 5 January 1995 to consider compensation.

At the earlier hearing the Respondent had told the Industrial Tribunal that he not been able to find work during the preceding 18 months, although we see from that decision that no evidence was given on the question of remedies at the first hearing.

At the remedies hearing the Appellant put into evidence a witness statement from a Mr Sean Pike, the Operations Manager of an employment agency, Adia Task Force. The Tribunal accepted that statement as fact. Mr Pike's evidence was to the effect that the Respondent had registered for work with the agency on 3 February 1993. He started work on 19 September 1993 and worked, perhaps intermittently, until shortly before Christmas 1994, when he told Mr Pike he was not looking for work because he was going back to Court to claim compensation, so he did not want to work. When asked how he was managing for money he said that he was fixing cars outside his house for cash in hand, and it was agreed between the parties that he had earned at least £2,039.31 between the date of dismissal and the date of the remedies hearing.

The Industrial Tribunal accepted that in the circumstances the Respondent had deliberately misled the Tribunal on 6 July 1994, when he said that he had not worked between dismissal and that date.

In the Tribunal's second decision at paragraph 10 they say this:

"10 The Tribunal has accepted as fact the evidence set out in the signed statement of Mr Pike, for the reason that the Applicant had failed to notify the Respondent that he had been working, and had failed to inform his own representative that he had been working. It was the view of the Tribunal that he had deliberately misled the Tribunal on 6 July, and that he would have repeated his evidence had it not been for the Respondent presenting this evidence to this hearing."

The Tribunal went on to conclude that it would be just and equitable, under Section 74(1) of the Employment Protection (Consolidation) Act 1978 to reduce the gross calculation of loss by double the agreed minimum earnings figure. Nevertheless, that did not reduce the compensatory award below the maximum of £11,000 and that sum was awarded together with a basic award, subject to recoupment of State Benefits.

The principal ground of this appeal, attractively argued by Mr Sweeney on behalf of the employer, was that the Industrial Tribunal had wrongly considered itself unable, on a proper construction of Section 74(1), to make an award of nil compensation as Mr Sweeney had submitted it should.

We should make it clear that such a view of the law is not expressed in the Industrial Tribunal's reasons, but we shall assume for the purpose of this appeal that that was indeed, their view. The argument is put in this way. It is the Appellants' contention that Section 74(1) grants a discretion to the Tribunal to award such amount by way of a compensatory award as the Tribunal considers just and equitable in all the circumstances. It is not limited in carrying out that exercise to the following words of the sub-section:

" ... having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

The starting point is Section 74(1) and I will read it:

"74(1) Subject to sections 75 and 76 [subsection (8) and section 76], the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

In support of his construction, Mr Sweeney relies first, on two passages from the speeches in the House of Lords authority of W Devis & Sons Ltd v Atkins [1977] ICR 662. First, from the speech of Viscount Dilhorne, at page 679 D - F where his Lordship says this:

"Paragraph 19(1) [which was the predecessor of section 74(1)] requires the compensation to be such amount as the tribunal considers just and equitable in `all the circumstances, having regard to the loss sustained' by the employee in consequence of the matters to which the complaint relates in so far as that loss was attributable to action taken by or on behalf of the employer.

The paragraph does not, ... [nor did its predecessor under the 1971 Industrial Relations Act] provide that regard should be had only to the loss resulting from the dismissal being unfair. Regard must be had to that but the award must be just and equitable in all the circumstances, and it cannot be just and equitable that a sum should be awarded in compensation when in fact the employee has suffered no injustice by being dismissed."

The second passage is taken from the speech of Lord Simon at page 683 G to 684 B. His Lordship said:

"I would myself, on the natural meaning of the words in paragraph 19(1) as they strike me, read `having regard to ...' as governing (and therefore limiting) `just and equitable in all the circumstances.' But the converse reading does no great violence to the language - namely, reading `just and equitable in all the circumstances' as the governing phrase (so that `having regard to ... ' would not limit `considers just and equitable in all the circumstances'). The fact that my noble and learned friend, Viscount Dilhorne, considers that this is the natural way of reading the sub-paragraph satisfies me that, even were my first impression of the language correct, it would require little modification, involving no real violence to the language, to produce such a result as to obviate injustice.

In other words, although an employer cannot rely under paragraph 6 [of Schedule 1 to the Trade Union and Labour Relations Act 1974] on serious misconduct unknown to him at the time of the dismissal so as to transmogrify what would otherwise be an unfair dismissal into a fair dismissal, he could rely on such conduct under paragraph 17(2)(b) to establish that it would not be practicable and in accordance with equity for the employee to be reinstated or re-engaged by him; and again under paragraph 19(1) to minimise compensation (indeed, to justify a nil award). I do not consider that a finding that a dismissal was `unfair' in these circumstances (although no doubt wounding to a careful employer) is sufficient to justify the virtual re-writing of paragraph 6(8) [which was the equivalent of section 57(3) of the 1978 Act]."

It should be remembered that the facts in Devis v Atkins were that after dismissal for reason (a) the employer discovered misconduct by the employee during his employment, which had it been known before dismissal would have justified dismissal for reason (b). The Industrial Tribunal decided the question of fairness on reason (a) and did not permit the employer to adduce evidence as to reason (b) on the question of fairness. They found the dismissal to be unfair on that basis. The House of Lords upheld that finding of unfair dismissal, but went on to hold that after-acquired knowledge of misconduct during employment was relevant to the assessment of the compensatory award and may result in a finding of nil compensation.

The rationale of that decision, as we understand it, is that where an employee could have been fairly dismissed as a result of misconduct, which he concealed from his employer, it would not be just and equitable for him to be compensated for dismissal for a different reason, which the Tribunal characterised as unfair.

A different example of where nil compensation may be awarded arises in the case of a procedurally unfair dismissal by reason of redundancy. There, if a fair procedure would have produced the same result the employee has suffered no loss as a result of the unfair dismissal and thus may not be entitled to any compensation.

Mr Sweeney sought further support from the decision of this Tribunal in Courage Take Home Trade Ltd v Keys [1986] ICR 874. In that case, following a finding of unfair dismissal, the Applicant accepted a sum by way of compensation under an agreement between the parties expressed to be in full and final settlement of the claim. The Applicant, relying on Section 140(1) of the 1978 Act, contended that such an agreement was void and claimed further compensation.

The Industrial Tribunal found that, although the agreement was void under Section 140(1), it was not just and equitable to make a further award of compensation. The Employment Appeal Tribunal upheld that decision and in giving the judgment of the Tribunal, Mr Justice Popplewell at page 880 D said this (at letter D he sets out from the Industrial Tribunal's finding this paragraph of their reasons):

"The [employers'] contention is that it is not just and equitable that the [employee] should, by an act verging on fraud, benefit by obtaining a further sum. The [employee] claims that his loss, as we have already set out above, exceeds the amount he has received and any additional sum we can award; therefore, it is just and equitable for him to have a second payment. This may seem attractive at first sight but if we accepted it we would be holding that Parliament in placing a ceiling of £7,500 for the compensatory award were not acting justly and inequitably: a thing we cannot do. We must therefore reject this contention."

And finally, at page 881 D his Lordship referred to the words of Lord Reid in Post Office v Crouch [1974] ICR 378 at page 399. He said:

"Under section 106(2) [that is of the Industrial Relations Act 1971] it - the industrial tribunal - `may, if it considers that it would be just and equitable to do so', make an order determining the complainant's rights or award compensation to him or give both remedies. This, in my judgment, shows that the Act must be construed in a broad and reasonable way so that legal technicalities shall not prevail against industrial realities and common sense. An unreasonable employer who tries to insist on his strict legal rights will get no comfort from the Act."

And Popplewell J. concluded in the present case for `employer' read `employee'.

Finally, and very properly, Mr Sweeney referred us to a recent decision of this Tribunal in Soros and Another v Davison and Another [1994] ICR 590, which he accepts is against his contention. In that case, the question was whether breach of a post termination obligation of confidentiality to be implied into the contract of employment, could be relevant to the assessment of compensation for unfair dismissal under section 74(1). Tudor-Evans J. in giving the judgment of the Appeal Tribunal, considered the two earlier authorities which I have mentioned, distinguished them and concluded that post-termination misconduct was not relevant to the assessment of compensation.

In our judgment, Mr Sweeney's submission cannot be accepted. It is correct to say that the assessment of compensation under Section 74(1) is not simply limited to looking at the loss which flows from the unfair dismissal; thus a Tribunal can look at after acquired knowledge of pre-termination misconduct as in Devis v Atkins, or at what would have happened if a fair dismissal procedure had been followed. Similarly, in calculating the loss post dismissal, a Tribunal may take into account (as did this Tribunal) the veracity of witnesses as to the loss actually sustained and make adjustments where, as in this case, the Applicant has attempted to mislead it. But we do not construe Section 74(1), nor any of the authorities cited, as permitting a Tribunal to assess compensation without any regard to the actual loss sustained by the Applicant in consequence of the dismissal. That is what, in our view, Mr Sweeney is inviting us to do.

He made further submissions. First, that to award maximum compensation here would be contrary to public policy in that it encourages bad behaviour on the part of applicants who seek to deceive both the Department of Social Security and the Tribunal itself and, indeed, the employer.

Apart from its novelty, we cannot see that anything in this Tribunal's decision encourages such behaviour. On the contrary, this Respondent's behaviour was roundly and properly condemned. We also observe that any payments of benefit made by the D.S.S. would be recouped by the department by virtue of the Recoupment Notice issued in this case.

Finally, he invites us to say that the Tribunal's method of dealing with the Respondents' deception, namely to double the minimum amount of post dismissal earnings which were to be deducted from the gross calculation of compensatory loss, was perverse. We bear in mind the various definitions of "perversity", including irrational decision and impermissible option, and cannot say that this Industrial Tribunal's decision fell within that category.

It seems to us that the Industrial Tribunal's approach was well within its discretion under Section 74(1) and in these circumstances the appeal is dismissed.